Latitud: Best Ever Quarterly Result As Expected

Latitude Tree FY16Q1 Financial Result

LATITUD (RM mil)	FY16Q1	FY15Q4	FY15Q3	FY15Q2	FY15Q1
Revenue	218.0	179.6	165.6	189.1	175.7
Gross Profit	35.6	29.4	27.5	34.4	26.2
Gross%	16.3	16.4	16.6	18.2	14.9
PBT	31.3	21.2	21.3	29.5	18.5
PBT%	14.4	11.8	12.9	15.6	10.5
PATAMI	28.1	16.2	19.5	27.4	16.6
MAS Rev	34.0	26.4	31.2	32.1	27.7
MAS PBT	10.7	1.5	5.4	5.4	2.3
VIET Rev	176.4	145.9	125.8	149.4	141.0
VIET PBT	18.9	18.4	14.4	22.6	14.8
THAI Rev	5.5	4.9	9.0	5.6	5.8
THAI PBT	0.8	0.2	1.1	0.7	1.0
Total Equity	479.4	410.7	390.1	366.6	327.2
Total Assets	729.9	594.3	575.6	548.6	502.8
Trade Receivables	79.8	49.3	63.3	63.4	59.9
Inventories	128.9	118.7	109.7	103.9	97.4
Cash	214.5	165.8	142.1	151.3	124.0
Total Liabilities	249.1	182.4	184.3	181.0	173.1
Trade Payables	110.5	88.1	75.0	89.9	91.7
ST Borrowings	105.3	76.9	90.4	82.6	74.8
LT Borrowings	26.2	12.4	17.1	6.1	6.4
Net Cash Flow	33.9	19.0	-1.0	15.9	-1.6
Operation	7.9	65.4	22.8	22.2	6.1
Depreciation	3.8	18.6	14.0	9.0	4.4
Investment	-11.1	-37.8	-34.8	-7.5	-2.7
PPE purchase	4.0	31.6	28.7	2.5	1.1
Financing	24.1	-14.5	3.6	-2.2	-6.1
FCF	3.9	33.8	-5.9	19.7	5.0
Dividend paid	0.0	8.3	8.3	0.0	0.0
EPS	28.95	16.66	20.07	28.19	17.13
NAS	4.93	4.22	4.01	3.77	3.37
Net D/E Ratio	NC	NC	NC	NC	NC

Latitude just posted its record-breaking quarterly result in term of revenue, PBT and EPS.

Compared to immediate preceding quarter of FY15Q4, revenue in FY16Q1 increased by 21.3% to RM218mil thanks to stronger USD against MYR by 17%. The rest of the improvement was contributed by higher orders and higher production output.

PBT increased by 47.6% or RM10.1mil QoQ and there was a forex gain of RM7.8mil in this quarter.

Geographical breakdown showed a significant jump in Malaysia's revenue and PBT margin.

Balance sheet and cash flow remain good as usual.

Earlier, Latitude has proposed a 12sen dividend for its FY15.

Though it is 40% higher compared to FY14's dividend of 8.5sen, it just represents 15% of dividend payout for FY15.

Does the management wish to keep more cash for imminent expansion, or just reluctant to share its profit with shareholders?

I can't say that its directors are stingy when they are getting salaries like this:

       ARFY15

Normally one executive director in a small listed company can easily get paid RM1mil a year, but those 2 executive plus 4 non-executive directors of Latitude only get RM415,000 a year in total, not even enough to buy a double storey terrace house...

Regarding future expansion, Latitude plans to expand its upstream operation especially Kiln Dry and Saw Mill facilities to meet its raw materials requirement.

       Saw Mill

The newly acquired panel board lamination factory will provide new varieties of raw materials and allows Latitude to diversify into new industry & new products.

This new factory located in Klang was acquired in Jan15 for RM22mil and started commercial operation in May15.

Besides, Latitude has allocated RM35mil to upgrade or automate its existing production lines to improve production efficiency.

Latitude exports 99% of its furniture and 92% goes to US. It plans to explore other markets with high growth potential such as Australia, China, Russia, India and Indonesia.

However, it just dissolved its subsidiary in Indonesia in Oct14.

Today Latitude's share price closed at RM7.43, which is at an actual PE of 9.1x base on FY15 EPS of 82sen.

Will it produce a better financial result and give higher dividend in FY16?

There might be a chance. We can only wait and see.